Oil, Copper, Coffee Futures Surge
The bull market in hard assets is showing few signs of slowing.
In New York futures trading on Tuesday, crude oil prices surged anew on supply concerns, copper reached its highest level in more than six years and coffee rose to its highest in more than three years.
The February oil futures contract jumped $1.13 to $36.20 a barrel on its final day of trading -- reaching the highest level since just before the Iraq war started in March -- after a blast at a liquefied natural gas plant on Monday halted oil and petroleum product shipments from the second-largest Algerian export terminal.
The blast occurred as cold weather in the eastern U.S. raised the possibility of higher demand for crude oil and heating fuel in the near term.
Because oil inventories in the United States are at 28-year lows, “the market is very sensitive to any disruption” of supply, said Ed Silliere, vice president of risk management for Energy Merchant in New York.
The March crude oil contract also jumped on Tuesday, ending at $34.87, up 87 cents.
Near-term oil futures were trading below $30 a barrel as recently as late November.
Rising crude oil prices have helped push retail gasoline prices higher in recent weeks.
Copper gained after mining giant Freeport-McMoRan Copper & Gold said rock slides last fall at its mine in Indonesia would depress copper and gold production this year.
Freeport lowered its forecast for 2004 copper sales to 1 billion pounds from 1.4 billion.
The company’s Grasberg mine in Indonesia has the world’s second-largest copper reserves.
February copper futures rose 2.25 cents to $1.115 per pound, the highest closing price since July 1997.
Copper has been rocketing during the last year in part because of robust demand from Chinese manufacturing companies. The metal is used in many products.
Global demand for copper is forecast to exceed production at refineries and scrap yards by 386,000 metric tons this year, requiring suppliers to tap deeper into inventories, the Lisbon-based International Copper Study Group has said.
In coffee futures trading, the March contract rose 3.55 cents to 74.7 cents a pound, the highest since late in 2000.
Supply concerns -- focused on a possible shortfall by Brazilian growers this year -- have encouraged speculators to jump into the coffee market, analysts said.
Also, a Brazilian agriculture ministry official said Tuesday that the government aimed to raise domestic coffee consumption to between 50% and 55% of the nation’s crop by 2006, from 35% to 40% currently.
